County plans audit of Brookfield's tax relief

Comptroller plans scrutiny of $1.2M in Empire Zone tax benefits company receives for site in Cohoes

By LARRY RULISON Business writer

Published 12:23 am, Monday, October 11, 2010

Photo: Philip Kamrass

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View of Cohoes Falls and the School Street hydro plant, left, in Cohoes, NY on Sunday October 10, 2010. ( Philip Kamrass / Times Union )

View of Cohoes Falls and the School Street hydro plant, left, in Cohoes, NY on Sunday October 10, 2010. ( Philip Kamrass / Times Union )

Photo: Philip Kamrass

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ew of Cohoes Falls and the School Street hydro plant, left, in Cohoes, NY on Sunday October 10, 2010. ( Philip Kamrass / Times Union )

ew of Cohoes Falls and the School Street hydro plant, left, in Cohoes, NY on Sunday October 10, 2010. ( Philip Kamrass / Times Union )

Photo: Philip Kamrass

County plans audit of Brookfield's tax relief

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COHOES -- Albany County Comptroller Mike Conners plans to launch an audit of the Empire Zone tax benefits that Brookfield Renewable Power receives for its School Street hydro power plant in Cohoes.

Brookfield, a Canadian-owned company that owns more than 70 hydro plants across the state, earns more than $1.2 million in property tax relief at the Cohoes site through the Empire Zone program, which was created by the state in the 1980s to help distressed areas create jobs and lure new businesses.

Brookfield has about 40 hydro plants in Empire Zones across the state, earning the company approximately $13 million in local property tax relief annually.

But following a Times Union story published last week that called into question the way Brookfield reports the number of employees that work at the Cohoes plant, Conners said he is in the process of beginning an audit of Brookfield.

Although Brookfield claims 13 employees at the Cohoes site in its Empire Zone documentation, company officials have acknowledged that some of those employees work at other Brookfield power plants outside of the county's Empire Zone.

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"I'm worried they are improperly using the benefits of the Empire Zone and that they're claiming jobs that don't exist," Conners said.

Brookfield did not return repeated phone calls and e-mails asking for comment. Conners says he is in the process of notifying Brookfield of his plans.

In previous interviews with the Times Union, Brookfield representatives have insisted that as long as employees check in each morning at the Cohoes plant, the company is allowed to dispatch them to other locations under Empire Zone rules. The representatives have said under this practice, Brookfield has always retained its Empire Zone certification in Cohoes even as hundreds of other companies have been decertified as part of a reform of the program under Gov. David Paterson.

An audit by Albany County would make Brookfield's participation in the Empire Zone program even more tenuous that it already has been. The company is involved in a lawsuit filed in Albany County suing the Empire Zone Designation Board after it revoked the certification of two of the company's hydro plants in Oneida County in 2009 for falling short of new investment requirements.

Between 2005 and 2007, Brookfield claimed $4 million in tax breaks in Oneida County while only investing $1.2 million in the two facilities. New requirements require a 1-to-1 investment to benefit ratio.

The Empire Zone program has been a major windfall for Brookfield, which entered the state in 2004 when it acquired a huge portfolio of hydro plants owned by Reliant Energy. Between 2005 and 2007, the company earned $41 million in tax benefits while investing and paying wages totaling nearly $60 million at its Empire Zone sites from Albany and Oswego. Brookfield claims the benefits through a subsidiary called Erie Boulevard Hydropower.

The first of the plants became certified in 1999 when they were owned by Orion Power, and more became certified after Orion was acquired by Reliant Energy several years later. The plants were originally owned by Niagara Mohawk Power Corp., which sold them off in the late 1990s as part of the forced deregulation of utilities in New York.

The Cohoes plant became certified under the Empire Zone program in December of 2001 as part of a settlement of a long-standing property tax dispute between the city of Cohoes and the previous owners that began in the 1990s when it was owned by NiMo.

Since 2006, Brookfield says it has invested $25 million in the Cohoes site, including the creation of two new parks with views of the historic Cohoes Falls. The company was awarded a 40-year license for the 38-megawatt power plant in 2007, although the license has been challenged by the Green Island Power Authority, which has sought to replace the Brookfield plant with a 100-megawatt facility of its own.

GIPA, which supplies power to the village of Green Island, has been fighting to operate a plant in Cohoes for a decade, first by trying to take over the School Street plant through eminent domain.

Under the Empire Zone program, the state covers the local property tax bills of the companies that participate. The program has since been closed to new applicants and replaced with new programs after widespread complaints of abuse.

Larry Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com